Santander Mulls Over €15 Bn Popular Property-Asset Sale

16 June 2017 – Bloomberg

Banco Santander SA is testing investor appetite for soured loans and repossessed property assets with a face value of as much as €15 billion ($16.8 billion), in a sign that the company is racing ahead with its plan to clean up Banco Popular Espanol SA’s balance sheet, according to three people with knowledge of the situation.

Santander acquired the assets when it bought stricken lender Popular last week, said the people, who asked not to be identified because the matter is private. The Spanish bank is also preparing the sale of commercial property assets valued at as much as €500 million, the people said.

Spain’s biggest lender paid 1 euro for Popular in a sale brokered by European regulators after it suffered a run on deposits. Santander said it would raise €7 billion in capital to shore up Popular’s balance sheet and embark on a rapid sale of its property. Popular has €29.8 billion of property assets and soured real estate loans, according to a presentation on Santander’s website.

Real estate assets that may be sold include Popular’s new headquarters and the Beatriz building in Madrid, whose tenants include KKR & Co., the people said. Also on the block are 1,000 rented homes, plots of land and offices in Madrid and Barcelona, two of the people said.

Santander Chairman Ana Botin told Bloomberg TV last week that her plan to turn around Popular includes the goal of selling at least half of Popular’s real estate assets in the next 18 months. Popular’s troubles reached a crisis point as doubts about the scale of its real estate losses scared away would-be buyers and its plunging share price made raising capital impossible.

The proposed sales are separate from a process Popular had in place before it was taken over to divest a €480 million batch of non-performing loans backed by 16 hotels across Spain, the three people said. The deadline for bids for those loans was June 9.

Original story: Bloomberg (by Sharon R Smyth and Estebán Duarte)

Edited by: Carmel Drake

Popular Puts €1,500M Macro RE Portfolio Up For Sale

6 June 2017 – Voz Pópuli

(…). The entity chaired by Emilio Saracho (pictured above) has launched an express plan to sell its problem assets and one of the key elements is the sale of the largest real estate portfolio to come onto the market in Spain since 2015. The portfolio of properties has been designed by KPMG, and has an initial value of between €1,500 million and €2,000 million, according to financial sources consulted by Vozpópuli. This is part of the plan that the entity is presenting to the ECB today to regain the confidence of the regulators. (…).

In addition, Saracho has spent the last few days meeting with investment banks to see how to accelerate the unblocking of Popular’s problem assets. (…).

The sale of problem assets is critical for Banco Popular regardless of its future. The heavy weight of those assets (worth €37,000 million) is the source of this entity’s problems, which have been further compounded in recent months by its capital and liquidity troubles and the risk of claims. (…).

For this reason, Banco Popular needs to accelerate the sale of the €36,800 million that it owns in toxic assets as soon as possible. Above all, it needs to focus on its foreclosed assets, which have the lowest level of coverage (38.5%) and which most concern the market and potential buyers. To bring the provisioning level of its properties in line with the levels adopted by BBVA and Santander, Popular would need to recognise (additional provisions of) around €1,500 million to €2,000 million.

Under the spotlight

With the sale of portfolios such as the one being advised by KPMG, Banco Popular would reduce some of its problems. Even so, financial sources doubt that the short term future of the entity is going to be determined by operations such as this one (…). Rather, they add, that this is a way of getting ahead with the work, regardless of the solution.

In this sense, the banks that are considering submitting a bid for Banco Popular have been making contact with opportunistic funds and investment banks over the last few weeks to work out how to share out the Spanish entity: the good bank could go to Santander, BBVA and Bankia, and the problem assets could go to overseas investors.

The key to accelerating the unblocking of the real estate assets is the prices that Banco Popular can accept on the basis of its provisions. Currently, the foreclosed assets are recognised on the balance sheet at 60% of their initial values, well above the values demanded by the opportunistic funds, which are closer to 30-40% of their initial values (…).

The portfolio that Popular is preparing represents one of the largest currently up for sale in Europe and the fourth largest to go on the market in Spain ever, after: Project Hércules, involving €6,400 million in problematic mortgages from Catalunya Banc, which was acquired by Blackstone; Project Octopus, containing €4,500 million in Eurohypo loans, which were purchased by Lone Star and JPMorgan; and Project Big Bang, which saw Bankia put most of its foreclosed assets up for sale, in a deal that it negotiated to the end with Cerberus, but which failed to close.

The two main favourites to acquire this latest portfolio are Blackstone and Apollo, the two funds that have been buying Popular’s other portfolios to date, albeit smaller ones, averaging around €400 million to €500 million. The entity currently has another process underway, involving a €500 million portfolio, which is being coordinated by Irea, and in which the following entities are competing: Oaktree, Apollo, Bank of America and Bain Capital.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

VIA Outlets Buys 4 European Outlet Centres, Including 1 In Sevilla

25 November 2016 – Real Estate Press

VIA Outlets, the joint venture formed by APG, Hammerson Plc, Meyer Bergman and Value Retail, has signed an agreement to acquire four outlet centres, with a total value of €587 million and an initial yield of 5.5%, in a deal that is pending authorisation by the regulators.

The outlets are located close to major cities in Germany, Portugal, Spain and Poland. This purchase increases the value of VIA Outlets’ portfolio, which comprises ten assets, to €1,100 million, in which Hammerson owns a 47% stake.

Timon Drakesmith, CFO of Hammerson Plc and Chairman of VIA Outlets’ Advisory Committee, said: “This is a rare opportunity to acquire these four outlet centres in an off-market operation”.

“The European markets are very well positioned and are continuing to experience strong sales growth, supported by improved supply and an increase in the number of tourists across Europe”.

VIA Outlets has identified opportunities to boost sales growth and revenues from the operation, through a change in the commercial mix and the implementation of various marketing and tourism initiatives.

To support the portfolio increase, the organisational structure of VIA Outlets has been improved through external hires to expand the asset management, marketing and finance teams. The estimated IRR for the assets acquired is 11% over five years. (…).

In Spain, the JV has acquired the outlet located in the north east of Sevilla, which attracts a growing number of tourists visiting Andalucía. The outlet has a surface area of 16,400 m2, and is home to 65 brands, including Tommy Hilfiger, Mango, Polo Ralph Lauren and Adidas. Its annual sales amount to €3,600 per m2. (…).

Original story: Real Estate Press

Translation: Carmel Drake